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First the Chicken: The Origins of First the Chicken: The Origins of Flexible Accumulation in AgrifoodFlexible Accumulation in Agrifood
Douglas H. Constance*, Jason Konefal*, Douglas H. Constance*, Jason Konefal*,
William D. Heffernan** and Anthony Rainey*William D. Heffernan** and Anthony Rainey*
*Sam Houston State University *Sam Houston State University
**University of Missouri - Columbia**University of Missouri - Columbia
Presentation for the annual meeting of the Presentation for the annual meeting of the
Rural Sociological Association: SAFRIG Mini-Conference Rural Sociological Association: SAFRIG Mini-Conference
July 28, 2012July 28, 2012
The PremiseThe Premise
If you want to understand agrifood If you want to understand agrifood globalization, you should study the poultry globalization, you should study the poultry industry. industry.
The poultry industry is the original model The poultry industry is the original model of neoliberal structuring and flexible of neoliberal structuring and flexible accumulation in agriculture. accumulation in agriculture.
The FrameworkThe Framework
Commodity Systems AnalysisCommodity Systems Analysis (Friedland 1984) (Friedland 1984)
Agrifood RegimesAgrifood Regimes (Friedmann and McMichael 1989) (Friedmann and McMichael 1989)
Agrifood RegimesAgrifood Regimes
Agrifood Regimes: Friedmann and McMichael (1989)Agrifood Regimes: Friedmann and McMichael (1989) 1880s to 1920s – Settler/Colonial (Empire - Britain)1880s to 1920s – Settler/Colonial (Empire - Britain) 1940s to 1970s – Agricultural Surplus (State - US)1940s to 1970s – Agricultural Surplus (State - US)
The 3The 3rdrd. Agrifood Regime (Market as hegemon). Agrifood Regime (Market as hegemon) Corporate Corporate (McMichael 2005)(McMichael 2005) Corporate-Environmental Corporate-Environmental (Friedmann 2005)(Friedmann 2005) Financialized Financialized (Burch/Lawrence 2009)(Burch/Lawrence 2009) Neoliberal Food Neoliberal Food (Pechlaner /Otero 2010)(Pechlaner /Otero 2010) Nutritionalization Nutritionalization (Dixon 2009)(Dixon 2009) Food from Somewhere Food from Somewhere (Campbell 2009)(Campbell 2009)
Agrifood RegimesAgrifood Regimes
Corporate Food Regime Corporate Food Regime (McMichael 2005)(McMichael 2005)Based on neoliberal restructuring (Harvey 2005)Based on neoliberal restructuring (Harvey 2005)Consolidation/concentration of agrifood sectorsConsolidation/concentration of agrifood sectorsAccumulation by dispossession Accumulation by dispossession Consumer food crisesConsumer food crises
Agrifood RegimesAgrifood RegimesGlobalization Project Globalization Project (McMichael 1996)(McMichael 1996)
Contested Project – (Bonanno and Constance 2008)Contested Project – (Bonanno and Constance 2008)
Corporate response to success of social-Corporate response to success of social-democratic movements of Fordismdemocratic movements of Fordism
Capital Flight – avoid regulations in NorthCapital Flight – avoid regulations in North Decentralization of Production – multi-site sourcingDecentralization of Production – multi-site sourcing Informalization of Labor - anti-union, minorities, casualizationInformalization of Labor - anti-union, minorities, casualization Global Sourcing – global commodity chains Global Sourcing – global commodity chains
The LiteratureThe Literature
Living on Contract Living on Contract (Little and Watts 1994)(Little and Watts 1994)
Flexible form of organizing commodity chainsFlexible form of organizing commodity chainsProvides control without liability and Provides control without liability and
responsibility responsibility
Poultry Agro-Industrial Districts in US Poultry Agro-Industrial Districts in US South South (Boyd and Watts 1997)(Boyd and Watts 1997)
Early model of flexible accumulation Early model of flexible accumulation
History of Poultry IndustryHistory of Poultry Industry
1930s - Northeast US: Independent system 1930s - Northeast US: Independent system servicing urban markets. servicing urban markets.
1940s – Northeast production for the war1940s – Northeast production for the war
1940s- 50s – Southeast US dominates 1940s- 50s – Southeast US dominates productionproduction
Industry Moves South: 1940sIndustry Moves South: 1940s
Abundance of small marginal farmersAbundance of small marginal farmersFarmers suffering from cotton crop failures Farmers suffering from cotton crop failures
History of sharecroppingHistory of sharecroppingPlanters, merchants and feed dealers Planters, merchants and feed dealers
extending informal creditextending informal credit
Availability of surplus labor for processingAvailability of surplus labor for processingWomen and minorities (non-union)Women and minorities (non-union)
Vertical Integration: 1950s/1960s Vertical Integration: 1950s/1960s
Rationalization of the commodity chain Rationalization of the commodity chain
Genetics, hatcheries, feedmills, contract Genetics, hatcheries, feedmills, contract production, processing and transportationproduction, processing and transportation
Ralston Purina, Cargill, and Tyson emerge Ralston Purina, Cargill, and Tyson emerge as dominant companies as dominant companies
Independent production “non-existent”Independent production “non-existent”
Agro-Industrial DistrictsAgro-Industrial Districts
NW ArkansasNW ArkansasNorth GeorgiaNorth GeorgiaNorth AlabamaNorth AlabamaNE Texas/NW LouisianaNE Texas/NW LouisianaSouth Central North CarolinaSouth Central North Carolina
US Broiler Production Map
The Southern Model (Constance 2008)
The modern broiler system “possessed a distinctive southern accent from its inception” (Boyd and Watts 1997:184)
Southern ModelSouthern Model
Distinct labor processDistinct labor process
Processing – informal labor relationsProduction – sharecropping/contracts
Southern Model: ContractsSouthern Model: Contracts
1940s – 1960s: informal contracts changed 1940s – 1960s: informal contracts changed to formal contracts to formal contracts
Change from “a simple credit arrangement Change from “a simple credit arrangement to a tightly interlnked credit, input, and labor to a tightly interlnked credit, input, and labor contract” contract” (Boyd and Watts 1997) (Boyd and Watts 1997)
Poultry Contracts Poultry Contracts
Company provides chicks, feed, mgmt. Company provides chicks, feed, mgmt.
Grower provides land, labor, power, and Grower provides land, labor, power, and capital for growout barns. (asset specificity)capital for growout barns. (asset specificity)
Long term debt and short term contractsLong term debt and short term contracts
Quality of contract for grower erodes with Quality of contract for grower erodes with horizontal integration horizontal integration (Heffernan 2000).(Heffernan 2000).
Poultry Contracts Poultry Contracts
Contract system allows the integrator to Contract system allows the integrator to take advantage of the chief assets of the take advantage of the chief assets of the family farm – cheap, ‘docile’, and flexible family farm – cheap, ‘docile’, and flexible labor – without the burdens of equity or the labor – without the burdens of equity or the costs of wage labor. costs of wage labor. (Boyd and Watts 1997) (Boyd and Watts 1997)
Poultry Contracts Poultry Contracts
Social relations of production: independent Social relations of production: independent commodity producers are subordinated to commodity producers are subordinated to “management” through a distinctive labor “management” through a distinctive labor process. process. (Boyd and Watts 1997)(Boyd and Watts 1997)
Poultry Contracts Poultry Contracts
Grower Dependent and VulnerableGrower Dependent and Vulnerable
““contracts are batch to batch” … “fear of contracts are batch to batch” … “fear of being cut off” (being cut off” (Heffernan 1984) Heffernan 1984)
““propertied laborer” (propertied laborer” (Davis 1980Davis 1980)) ““serfs on the land” serfs on the land” (Breimyer 1965)(Breimyer 1965)
““only slaves left in the country” (only slaves left in the country” (Wellford Wellford 1990)1990)
Poultry Contracts: ConclusionsPoultry Contracts: Conclusions
Production contracts are “detours” around Production contracts are “detours” around “obstacles” to capitalist penetration of “obstacles” to capitalist penetration of agriculture – agriculture – (Mooney 1982) (Mooney 1982)
Provides control without ownership/liabilityProvides control without ownership/liabilityForm of labor discipline. Form of labor discipline.
System being adopted around the world System being adopted around the world Development agencies (IMF/WB/FAO)Development agencies (IMF/WB/FAO)Expanding into other agrifood sectorsExpanding into other agrifood sectors
Southern Model
The vertical integration system developed in the US South around agro-industrial districts is THE MODEL for the low cost production systems that are the social basis of competitiveness in a now global industry. (Boyd and Watts 1997)
Horizontal Integration: 1960s/2000s Horizontal Integration: 1960s/2000s
Commodity cyclesCommodity cycles
Mergers and acquisitionsMergers and acquisitions
Sector consolidation/concentrationSector consolidation/concentration
CR4 – 1963: 14%CR4 – 1963: 14% CR4 – 2009: 57% CR4 – 2009: 57%
Tyson Foods, Inc.: An ExampleTyson Foods, Inc.: An Example
1930s – John Tyson 1930s – John Tyson 1947–Tyson Feed & Hatchery, Inc. 1947–Tyson Feed & Hatchery, Inc. 1958 – buys first processing plant.1958 – buys first processing plant. 1963 – Tyson Foods, Inc.1963 – Tyson Foods, Inc. 1978 - buys Wilson Foods 1978 - buys Wilson Foods 1984 - buys Valmac Industries 1984 - buys Valmac Industries 1986 – buys Lane Processing1986 – buys Lane Processing 1989 – buys Holly Farms1989 – buys Holly Farms
Tyson Foods Tyson Foods
1998 – buys Hudson Farms, now largest 1998 – buys Hudson Farms, now largest broiler firm in US and worldbroiler firm in US and world
2001 - buys IBP, largest beef and pork 2001 - buys IBP, largest beef and pork processor in the US and worldprocessor in the US and world
The Problem: VI + HI = MO The Problem: VI + HI = MO
VI + HI = MOVI + HI = MO (Constance et al. 2012)(Constance et al. 2012)
Monopsony OpportunismMonopsony OpportunismPredatory BehaviorPredatory BehaviorForm of labor discipline Form of labor discipline
(Vukina and Leegmonchai 2006)(Vukina and Leegmonchai 2006)
Legitimation Crisis: Legitimation Crisis: Social Movement ResistanceSocial Movement Resistance
Poultry growers want USDA/USDOJ to Poultry growers want USDA/USDOJ to protect them from market power of the protect them from market power of the poultry companies. poultry companies.
National Contract Poultry Growers National Contract Poultry Growers AssociationAssociation
GIPSA Hearings (Grain Inspection GIPSA Hearings (Grain Inspection Packers Stockyard Adm. Packers Stockyard Adm.
USDOJ/USDA Public Workshops Exploring USDOJ/USDA Public Workshops Exploring Competition in Agriculture (2010)Competition in Agriculture (2010)
Five workshops: general/seeds; poultry; Five workshops: general/seeds; poultry; dairy; livestock; margins. dairy; livestock; margins.
Analysis of grower testimonyAnalysis of grower testimonyCompanies are Regional MonopsoniesCompanies are Regional Monopsonies
Suppress grower organizationSuppress grower organizationHold Up - Technology UpgradesHold Up - Technology Upgrades
Long term debt, short term contracts Long term debt, short term contracts Maintain debt (asset specificity) Maintain debt (asset specificity)
Tournament Ranking SystemTournament Ranking SystemLack of transparencyLack of transparencyChicks/feed/weight Chicks/feed/weight
Grower TestimonyGrower Testimony
Contract “renewals”Contract “renewals”From long to short termFrom long to short termSign contract or lose the farmSign contract or lose the farmAsset specificity leads to extortionAsset specificity leads to extortion
Fear of RetaliationFear of RetaliationBlacklist/poor chicks/bad feed/delaysBlacklist/poor chicks/bad feed/delays
Debt BondageDebt BondageAsset rich but cash poorAsset rich but cash poor
DebtDebt
““Once the grower bites the hook and goes Once the grower bites the hook and goes deep into debt they start a cycle of debt deep into debt they start a cycle of debt burden from which it is very difficult to burden from which it is very difficult to escape.” escape.”
ContractsContracts
““Before the end of the initial 10-year term Before the end of the initial 10-year term the company changed that contract to a 1-the company changed that contract to a 1-year term. I realized that the company year term. I realized that the company could change contracts easily by could change contracts easily by threatening to stop placing birds if I threatening to stop placing birds if I refused to sign.” refused to sign.”
ContractsContracts
““It’s only a contract until they bring you the It’s only a contract until they bring you the next one, you know. It might say 15 years, next one, you know. It might say 15 years, but two months from now they might but two months from now they might decide to change that contract. So they decide to change that contract. So they bring you a new one and you sign it, or bring you a new one and you sign it, or you don’t grow chicks, you know.” you don’t grow chicks, you know.”
ContractsContracts
““Contracts can be changed or terminated Contracts can be changed or terminated at any time for any reason and as growers at any time for any reason and as growers we have no recourse. And we’re forced to we have no recourse. And we’re forced to sign a contract whether we like it or not on sign a contract whether we like it or not on a take it or leave it basis because, you a take it or leave it basis because, you know, we can either sign it or face know, we can either sign it or face bankruptcy.” bankruptcy.”
Upgrading – HoldupUpgrading – Holdup
““And one of the things that always came And one of the things that always came up was upgrades and how the companies, up was upgrades and how the companies, the integrators would keep growers in debt the integrators would keep growers in debt with upgrades.” with upgrades.”
The Tournament The Tournament ““I think it’s unfair because of the lack of I think it’s unfair because of the lack of
transparency gives the company the ability transparency gives the company the ability to terminate or penalize growers based on to terminate or penalize growers based on false claims of poor performance that, in false claims of poor performance that, in fact, is out of the grower’s control?”fact, is out of the grower’s control?”
Tournament Tournament ““Anybody in this room knows that there is Anybody in this room knows that there is
no such thing as a level playing field, the no such thing as a level playing field, the inputs. There’s just too many variables: inputs. There’s just too many variables: quality of chicks; quality of feed; the feed quality of chicks; quality of feed; the feed deliveries. The stuff that’s outside of our deliveries. The stuff that’s outside of our control is almost endless.”control is almost endless.”
Information AsymmetryInformation Asymmetry
““Feed is formulated and mixed, loaded Feed is formulated and mixed, loaded and weighed by the company and then and weighed by the company and then delivered to the farm. Feed must be delivered to the farm. Feed must be accepted by the grower on the company’s accepted by the grower on the company’s say so. And there’s no guarantee that the say so. And there’s no guarantee that the feed is of the highest quality or quantity.” feed is of the highest quality or quantity.”
MonopsonyMonopsony
““In 1963 the top four firms controlled 14% In 1963 the top four firms controlled 14% of the chickens slaughtered. Today it’s of the chickens slaughtered. Today it’s roughly 57%. And now it’s not uncommon roughly 57%. And now it’s not uncommon for a grower to have to do business with for a grower to have to do business with only one company in their area.” only one company in their area.”
Economic ConcentrationEconomic Concentration
““So you’ve got consolidation on the retail So you’ve got consolidation on the retail side and you’ve got vertical integration on side and you’ve got vertical integration on the production side. And that can lead to a the production side. And that can lead to a lot of imbalance in the system.” lot of imbalance in the system.”
The Problem: VI + HI = MO The Problem: VI + HI = MO
Regional MonopsoniesRegional Monopsonies
Asset Specificity – debt dependencyAsset Specificity – debt dependencyHold Up – debt bondageHold Up – debt bondageThe Tournament The Tournament
Predatory Opportunism Predatory Opportunism Form of labor discipline Form of labor discipline
Araghi (2003)Araghi (2003)
““Slavish conditions of employment… Slavish conditions of employment… without visible enslavement.”without visible enslavement.”
Tyson International: Tyson International: Diffuse the Innovation Diffuse the Innovation
2003 – beef operations in China, Ireland 2003 – beef operations in China, Ireland and Russiaand Russia
2003 – broiler operations in Argentina, 2003 – broiler operations in Argentina, Brazil, China, Denmark, Indonesia, Japan, Brazil, China, Denmark, Indonesia, Japan, Korea, Malaysia, Mexico, Panama, Korea, Malaysia, Mexico, Panama, Philippines, Spain, UK, VenezuelaPhilippines, Spain, UK, Venezuela
Tyson International: Mexico Tyson International: Mexico
1987 joint venture with Trasgo de Mexico 1987 joint venture with Trasgo de Mexico and C. Itoh of Japan - CITRAand C. Itoh of Japan - CITRA
1994 Trasgo de Mexico - Tyson de Mexico1994 Trasgo de Mexico - Tyson de Mexico
2003 buys Nochistongo2003 buys Nochistongo
2003 largest “value added” producer 2003 largest “value added” producer
Tyson International: Mexico Tyson International: Mexico
Prototype : Mexico - after 20 years 3Prototype : Mexico - after 20 years 3rdrd. largest . largest overall and 1overall and 1stst. in value-added sales . in value-added sales
Return on Investment (ROI) in Mexico 30% Return on Investment (ROI) in Mexico 30% higher than UShigher than US
Followed its American customers South – Followed its American customers South – WalMart, McDonald’s, KFC, Burger KingWalMart, McDonald’s, KFC, Burger King
Regional Integration: Regional Integration: The Mexican Poultry IndustryThe Mexican Poultry Industry
#1 – Industrias Bachoco ($2B)#1 – Industrias Bachoco ($2B) #2 – JBS/Pilgrim’s Pride ($32B)#2 – JBS/Pilgrim’s Pride ($32B) #3 – Tyson/Tyson de Mexico ($28B)#3 – Tyson/Tyson de Mexico ($28B)
CR3 – 52% CR3 – 52% Increasing adoption of contract system. Increasing adoption of contract system.
JBS - Brazil JBS - Brazil
2005 – Buys Swift/Armour 2005 – Buys Swift/Armour Argentina (beef)Argentina (beef)
2007 – Buys Swift US 2007 – Buys Swift US and Australia (beef)and Australia (beef)
2008 – Buys Smithfield 2008 – Buys Smithfield Beef and Tasman Beef Beef and Tasman Beef
2009 – Buys Pilgrim’s 2009 – Buys Pilgrim’s Pride, Inc. (poultry) Pride, Inc. (poultry)
Mexico: Neoliberal RestructuringMexico: Neoliberal Restructuring 1984: Peso Crisis1984: Peso Crisis
IMF – Structural Adjustment LoansIMF – Structural Adjustment Loans
1995: NAFTA1995: NAFTAFDI; corn dumping FDI; corn dumping
Shifts from ejidos to private contractorsShifts from ejidos to private contractors
2007: Tortilla Crisis (Sin Maiz, No Hay Paiz)2007: Tortilla Crisis (Sin Maiz, No Hay Paiz)
Tyson: Diffuse the InnovationTyson: Diffuse the Innovation
2008 – buys Macedo, Avita, and 2008 – buys Macedo, Avita, and Frangobras of Brazil (poultry)Frangobras of Brazil (poultry)
2008 – joint venture with Godrej Foods of 2008 – joint venture with Godrej Foods of India (poultry)India (poultry)
2008 – joint venture with Hinchang Foods 2008 – joint venture with Hinchang Foods and Jinghai Poultry in China (poultry)and Jinghai Poultry in China (poultry)
2007 – joint venture with Cactus Feeders 2007 – joint venture with Cactus Feeders and Cresud in Argentina (beef) and Cresud in Argentina (beef)
Tyson - ConclusionsTyson - Conclusions
Corporate Philosophy: Corporate Philosophy: Segment, Concentrate, and DominateSegment, Concentrate, and Dominate
““We anticipate consumer demand, segment We anticipate consumer demand, segment a market, concentrate production and a market, concentrate production and marketing, and, subsequently, dominate marketing, and, subsequently, dominate that segment.” that segment.”
Neoliberalism and the Neoliberalism and the Southern ModelSouthern Model
Poultry industry is the preferred model of agrifood Poultry industry is the preferred model of agrifood globalization globalization Model of flexible accumulation Model of flexible accumulation Control without liability/responsibilityControl without liability/responsibilityCasualization of labor in production and processing – Casualization of labor in production and processing –
labor disciplinelabor disciplineModel of the “World Farm”Model of the “World Farm”
(see Burch 2005 on CP in Thailand)(see Burch 2005 on CP in Thailand)
ConclusionsConclusions
VI + HI = MOVI + HI = MO
MO = monopsony opportunism in productionMO = monopsony opportunism in productionBased on “debt bondage”Based on “debt bondage”
Growing monopsony power in retailing.Growing monopsony power in retailing. WalMart , food service, fast food driving the WalMart , food service, fast food driving the
commodity chains within the commodity system. commodity chains within the commodity system.
ConclusionsConclusions
If you want to see the preferred MODEL of If you want to see the preferred MODEL of global agrifood relations of production, global agrifood relations of production, study the poultry industry. study the poultry industry.
The MODEL is based on flexible labor and The MODEL is based on flexible labor and capital relations. capital relations.
The MODEL is form of sharecropping and The MODEL is form of sharecropping and a remnant of colonialism and slavery. a remnant of colonialism and slavery.